New York: Shares of Infoblox Inc slumped 41 percent to their life low on Friday, a day after the network equipment maker warned of a lower-than-expected profit for the fourth quarter, hurt by contract delays and a slowdown in customer additions.
At least five brokerages lowered their rating and eight cut their price target on Infoblox’s stock, citing uncertainty around the company’s new sales strategy as IT customers prioritized spending on network security over automation.
Analysts also highlighted concerns that any turnaround in Infoblox’s fortunes, which could last more than a year, would not be led by its chief executive of nearly 10 years, Robert Thomas, who said on Thursday that he would step down.
More than $450m was wiped off the company’s market value when the stock hit a life-low of $12.165 on Friday. The lowest target price set on the stock was $14.50, by D A Davidson, by midday Friday.
“With the sales effort in transition, and a slowing of growth in the general IP address management market in favor of other IT priorities, we believe it will be several quarters until a strong revenue growth path re-materializes for BLOX,” D A Davidson’s Mark Kelleher wrote in a note.
The brokerage had a “neutral” rating on the stock, similar to most other brokerages. No brokerage had a “sell” rating.
Infoblox said it expected to break even or earn up to 2 cents per share on an adjusted basis in the quarter ending July.
Pacific Crest’s Brent Bracelin said there was no “quick and easy fix” for the slowdown in orders that began last October.
Wedbush Securities analyst Sanjit Singh said a turnaround could take anything between three to six quarters as Infoblox could take up to nine months to book revenue from a sale.
Reuters
